OUR VIEW: Capping the city's credit limit

The Fall River City Council is taking a strong stance against the Flanagan administration’s excessive use of bonds to pay for a wide variety of public works projects. It’s about time. As Council President Linda Pereira told City Administrator Shawn Cadime and Director of Financial Services/Treasurer John Nunes,...

The Herald News, Fall River, MA

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Posted Mar. 11, 2013 at 12:01 AM
Updated Mar 11, 2013 at 11:22 AM

Posted Mar. 11, 2013 at 12:01 AM
Updated Mar 11, 2013 at 11:22 AM

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The Fall River City Council is taking a strong stance against the Flanagan administration’s excessive use of bonds to pay for a wide variety of public works projects. It’s about time. As Council President Linda Pereira told City Administrator Shawn Cadime and Director of Financial Services/Treasurer John Nunes, “We keep putting it on the credit card. I think there needs to be some sort of cap.”

The issue of the city’s $350 million borrowing problem came to light during a meeting of the council last week. A 3-inch report of Fall River’s outstanding debt was compiled by the city’s bond counsel. Cadime explained the specifics of the report to councilors.

Now, it appears, the council is pushing for an intervention on the city’s spending addiction that it has enabled — and even encouraged — for too long. The council seems to have finally seen the light after, as Pereira put it, “hearing from the general public we’re borrowing too much.”

The council voted 4-1, with Councilor Pat Casey opposed, to approve an ordinance that would place certain key restrictions on bonds under $5 million. Currently, such amounts of bonding must be approved by the council, but do not need to be approved by voters. At its meeting tonight, the council will consider a debt ceiling of sorts. The ordinance would establish a $20 million annual bonding limit. After the limit has been reached, bond questions for eligible projects would need to be approved by voters.

City Councilors Ray Mitchell and Mike Miozza had initially proposed a $10 million cap, but it was later determined that cap was too low and it was amended to $20 million. The higher cap seems to make sense since the expense of a low-turnout special election for bond issues would only tack on more to the cost of bonding.

Voters often approve bond requests put before them. The council, however, should be better equipped to understand the fiscal implications of excessive bonding. While the Flanagan administration has been all too eager to just charge it, the council has enabled that behavior and failed in its fiduciary responsibility to be a good steward of public dollars by approving the administration’s bond requests. As Cadime correctly pointed out in the exchange, the council, in fact, is the body that keeps increasing the credit limit. The council must approve every bond issue under $5 million.

The council is beginning to question bond requests from the administration that have come in just under the $5 million threshold to avoid the matter going to a vote. For example, there was a recent annual water projects bond at $4.98 million, while an energy improvements bond was for $4.9 million. Such requests clearly violate the spirit of the $5 million threshold requiring major bond requests to be approved by voters. But the council rubber-stamped those requests

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The $20 million annual bonding cap is a good start toward addressing Fall River’s problem of spending more than it has. While some capital spending projects are mandated or otherwise necessary, some are wasteful. The $875,000 for open space and recreation that went out to bond with the council’s approval is an example of bonds funding unnecessary special interests.

Placing the cap for the bonding threshold would add another layers of checks and balances on the propensity of elected officials to deliver services regardless of the fiscal consequences. However, it could also add another expense in the form of special elections and may not rein in spending at all.

Rather than playing the blame game, however, the council should do a better job of vetting such bonding proposals and prioritizing budget items to pay for them without having to borrow. Before asking voters — many of whom do not even pay property taxes — to consider the complicated fiscal implications of over-borrowing, the council ought to raise such concerns with the administration when bonding requests come up. Before expecting the public to vote down funding for public improvements they desire, the council must demonstrate the political courage to police overuse of the city’s credit card.